Review of Alaska's Claim for Federal Matching Funds for Reimbursable Service Expenditures Claimed As Other Financial Participation for The Quarter Ended June 30, 2003

EXECUTIVE SUMMARY:

The objective of this review was to determine whether Alaska properly calculated its reimbursable service expenditures that were claimed as other financial participation on Form CMS-64 for the quarter ended June 30, 2003.  Contrary to Federal cost principles, Alaska improperly calculated its reimbursable service expenditures that were claimed as other financial participation on Form CMS-64.  As a result, Alaska improperly claimed Federal matching funds of $346,217.  Alaska did not discover the calculation error because it did not have adequate internal controls to ensure that the claim for Federal matching funds was accurate.  We recommended that Alaska refund to the Federal Government the Federal matching funds of $346,217 that were improperly claimed as a result of the calculation error and develop and implement adequate internal controls to ensure that claims for Federal matching funds are properly calculated.  Alaska stated that it has already taken corrective action by reporting an adjustment on Form CMS-64.  Alaska did not address the recommendation that it develop and implement internal controls to ensure that claims for Federal matching funds are properly calculated.